The Economics of Prohibition
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murder: effects of prohibition against, 5; rates of, absent drug prohibition, 124; rates of, under drug prohibition, 122, 123, 125
Murphy, Dennis R., 91
Murphy, Kevin M., 10, 37–38
Muslims, opium use among, 58
Musto, David F.: on narcotic-maintenance programs, 147n.7; on origins of marijuana prohibition, 66; on political compromises over narcotics legislation, 63–64; on role of professions in prohibition, 56–57, 59, 62
Nadelmann, Ethan A., 136
narcotics: abuse of, 57–59; desire for, vs. attainment of satisfaction, 22; increased potency of, under prohibition, 89, 90; maintenance programs on, 64, 147n.7; medicinal use of, 57; as prescription-only drugs, 140; regulation of markets in, 40; as substitute for alcohol, 21; synthesis of, 109; taxation of, 148. See also heroin; opium
narcotics, prohibition of: association of, with crime and corruption, 126, 135, 136; creation of profit opportunities by, 123; enactment of, 60–65; laxity of, 124; origins of, 57–60, 69; as precedent for marijuana prohibition, 67; repeal of, 140, 153; special interests behind, 56–57, 59–60, 61–62. See also heroin, prohibition of
Narcotics Division, New York City Police Department, 135
National Alcohol Prohibition. See alcohol, prohibition of
National Association of Medicinal Products, 63
National Association of Retail Druggists, 63
National Commission on Law Observance and Enforcement, 26, 134–35
National Drug Trade Conference, 63
National Drug Trade Council, 63
National Drug Wholesalers Association, 59
National Institute on Drug Abuse, 72n, 91, 107, 110n
National Retail Liquor Dealers’ Association, 55
National Strategy for Prevention of Drug Abuse and Drug Trafficking (White House Drug Abuse Policy Office), 89
National Wholesale Druggists’ Association, 63
National Woman Suffrage Association, 48
nativist movement, 48
Nell, Humbert S., 125
neoclassical economics, view of market processes, 78
Newcomb, Simon, 12n.4
New Hampshire, 46
Newsweek, 9
New York City: heroin market in, 31–34; police corruption in, 133, 135
nicotine. See tobacco
Niskanen, William, 80–81
Nixon, Richard M., 125
The “Noble Experiment” (I. Fisher), 19
nonusers, discouragement by prohibition, 32, 33, 34
North, Gary, 41
Oberlin College, 18
O’Boyle, Ernie, 106n
Odegard, Peter H., 49, 50–51, 52
Oglethorpe, George, 41
oil (petroleum), as hemp substitute, 68
Oliver, F. E., 57–58
opium, 109n.10; control of, in medicinal compounds, 62, 64; “grip” of, 17; increased potency of, under prohibition, 89; international trade in, 62; medicinal use of, 57; “normal use” of, 18; spread of addiction to, 57–58, 60, 61n; substitutes for, 61n; use of, 57
opium, prohibition of, 86; enactment of, 60, 61; and international relations, 62
Ostrowski, James, 91
Pakistan, 136n
Palmer, Stanley H., 114
Panama, 136n
Pandiani, John A., 123, 124, 126
paper, hemp- vs. wood-based, 68
Pareto, Vilfredo, 35
patent medicine: addiction of consumers to, 61, 141; restrictions on, 59, 61–62, 63–64, 69; as source of opiates, 61
Patten, Simon N., 12–15, 29
PCP (phencyclidine), 90
Peltzman, Sam, 141
penalties: collected from alcohol prohibition, 100 (table), 101; corruption as function of severity of, 130; deterrent effect of, 116; judicial discretion over, 98, 99; potency of drugs relative to severity of, 96, 99, 109–10, 142; replacement of, by imprisonment with fines, 148; statutory specification of, 96, 110
Persoon, J. M. G., 149
Peru, 136n
Peter Principle, 81
pharmaceutical industry: compromise on narcotics control legislation, 63–64; monopoly status, 4, 64, 69; support for prohibition, 56–57, 59–60, 61–62, 69
Phillips, William R., 135
physicians. See medicine, organized
pietism, postmillennial, 12&n.3, 16, 43–44, 50, 56
police. See enforcement
police forces, formation of, 114, 121
political economy, and moral questions, 12n.4
Populist party, 49
pornography, prohibition of, 10, 11
Posner, Richard, 116
potency: and consumer tastes, 91; differentiation of demand according to, 91; dilution of, in illegal markets, 30–31; effects of, in enforcement, 90; as function of judicial discretion, 98, 99; as function of risk of capture, 96–99, 106–8, 108 (fig.), 110, 132, 142; as function of statutory penalties, 96, 99, 109–10, 142; as function of taxation, 95; health risks of variation in, 90–91; in mix of product attributes, 92, 93; regulation of, 149; relation of, to prohibition, 89–90, 91, 99–100, 103–5, 109–10, 143, 144, 145, 146; and technological changes, 91, 92 (fig.), 109, 110
Potency Monitoring Project, 107
poverty, as factor in crime, 113–14
price controls: as form of interventionism, 79; prohibition through, 148
price(s): after-tax, 93, 94–95, 99; consumption of substitutes as function of, 5–6, 144, 145; crime rates as function of, 31, 33, 77, 117, 119 (fig.), 119–20; demand as function of, 32, 33, 36, 37, 74, 91, 101–2, 117, 118 (figs.), 144, 145, 148; demand relative to differences in, 102–3, 103 (table), 108–9, 109–10; differentiation in, according to drug potency, 91; effect of enforcement on, 82–83; in free market, 150; as function of risk of capture, 97, 101, 117, 119, 120, 131, 142; of government services, 85; relative, under prohibition, 101–2, 102 (table); “street,” 97, 98
price supports, 83
prison sentences: deterrent effect of, 31; substitution of fines for, 148
private prohibition, 19–20, 25, 152
productivity: impact of alcohol consumption on, 25–27, 26 (table), 28–29, 29 (table); increase in, by prohibition, 16, 20
products, alteration in response to market forces, 78, 89
professional organizations: compromise on narcotics control legislation, 63–64; support for prohibition, 52&n, 53n, 56–57, 59–60, 61–62, 69
profits: entrepreneurial search for, 77–78, 80, 81, 93, 150; prohibition-created opportunities for, 82–83, 89, 116–17, 123, 130–32, 135–36, 142
Progressive Era: prohibition in, 4–5, 11, 40, 52, 53–56; racial views of, 68n; reforms of, 52–53; view of crime during, 115
prohibition: acceptance of, 86; alternatives to, 3–4, 139–40, 146–53; arguments favoring, 71–73; association of, with crime and corruption, 111–12, 122–24, 125, 126, 127, 133–38, 142, 143; changes in relative prices under, 101–2, 102 (table); correction of market failures with, 80, 141; costs of, 10, 11, 23, 25, 27, 29, 31, 34, 38, 100 (table), 100–101, 105–6, 106 (fig.), 112, 136–38, 143; creation of profit opportunities by, 82–83, 89, 116–17, 123, 130–32, 135–36, 142; definition of, 71; demand relative to price differences under, 102–3, 103 (table), 108–9, 109–10; discouragement of nonusers by, 32, 33, 34; discriminatory nature of, 39–40, 60, 62, 66, 67–68, 140; economic theories of, 3; economists as defenders of, 9, 10, 11–23; effects of, 5–6, 7, 86–88; enactment of, 29, 50, 55, 60–65, 105; and evolutionary competition, 13–15; feasibility of, 142–46; as form of interventionism, 79; growth and consolidation of, 50–56; historical perspective on, 4–5; impact of, on addictive behavior, 37; impact of, on consumer and producer, 74 (fig.), 74–75; intensification of criminal organization by, 125–26; and international relations, 62; irreversibility of, 39, 85; limitation of, 86–87; marginal costs of, 75, 76 & fig.; marginal utility of, 75–76; market conditions under, 30–34, 117–20, 118 (figs.), 119 (fig.), 148; motivations for, 40, 111, 140; origins o
f movement toward, 39, 43–47, 57–60, 65–69; politicization of, 47–50, 140; via price controls, 148; private vs. public, 19–20, 25, 152; rational basis for, 6; relation of drug potency to, 89–90, 91, 99–100, 103–5, 109–10, 143, 144, 145, 146; as remedy for crime and corruption, 16, 111, 112, 113, 126–27; replacement of market with bureaucracy under, 80–82, 141; scientific arguments for, 53–54; as side-effect of war, 5, 42, 43n, 55, 57, 62, 64–65, 69, 152; social/economic benefits of, 16, 20, 21, 24, 26–27, 143–44, 145, 146; special interests behind, 40, 52&n, 53n, 56–57, 59–60, 61–62, 68, 69; statutory definitions of, 96, 110; superiority of, to alternatives, 72–73; suppression of discovery process by, 80, 82, 83, 141, 143; as taxation, 93–94, 96, 97, 98–99; theory of crime underlying, 115. See also enforcement
Prohibition: Its Economic and Industrial Aspects (Feldman), 23–24
Prohibition Amendment. See Eighteenth [Prohibition] Amendment, U.S. Constitution
Prohibition at Its Worst (I. Fisher), 19
Prohibition party, 4, 47, 48–49, 50, 51
Prohibition Still at Its Worst (I. Fisher), 19, 139
property rights: changes in, 84; illegal exchange of, 128–29, 130; public officials as vendors of, 132
prostitution: as leisure, 7; and police corruption, 133, 135; prohibition of, as basis for organized crime, 125
protectionism, in alcohol markets, 42, 43
Protestants, evangelical, 12&n.3, 16; support for prohibition by, 48, 50, 51, 52, 56, 68; in temperance movement, 43–44, 45
public-choice economics, 6, 10, 132
public interest: justification of prohibition in, 71–72; pursuit of self-interest at expense of, 127–28
public opinion: appropriate levels of drug enforcement, 75n; health risks of drugs, 72n; marijuana decriminalization, 139n; support for prohibition, 143–44
public policy, economic analysis of, 73
Pure Food and Drug Act (1906), 61; prohibition clauses, 18–19
Puritans, regulation of intoxicants, 41
Pyle, David J., 114
quarantine, of heroin addicts, 147&n.6
Ramsey, J., 107n.8
rationality: and addiction, 10, 31, 35–38; of corruption, 127–28, 129; criminal behavior as form of, 113–14; of human action, 6–7, 10, 35, 77
Reagan, Ronald, 10
Reed, Lear B., 133
reform groups, motives of, 40, 140
regulation: of alcohol markets, 40, 41–43, 51, 54–55, 69, 121–22, 140, 149; as alternative to prohibition, 140, 149; association of corruption with, 129–30; capture by, of bureaucracies, 81; as form of interventionism, 79; prohibition as consequence of, 40, 54–55, 69, 80; suppression of discovery process by, 141
rehabilitation, of heroin addicts, 31n, 33
rent seeking: and changes in property rights, 84; distinguished from corruption, 6, 128; prohibition policy as, 6, 40, 52, 56, 59, 65, 68, 69, 71, 83, 140; similarity of, to corruption, 132
Republican party, 43, 46, 49, 50, 51
Reuter, Peter, 82–83, 90, 119
The Rise and Fall of Prohibition (Towne), 39
Road to Serfdom (Hayek), 85–86
Roback, Jennifer, 40
robbery: rates absent prohibition, 124; rates under prohibition, 122–23, 125
Roberts, Russel D., 148
Rockefeller, John D., 52
Roger Peet and Company, 52
Roosevelt, Theodore, 62
Root, A. I., 52
Root Beer Company, 52
Rose-Ackerman, Susan, 128–29, 132
Rosenstone, Stephen J., 48
Rothbard, Murray N., 55, 128–29
Rottenberg, Simon, 30–31, 90, 108, 130
rubber factory, absenteeism rates in, 25n
Rubin, Paul H., 115
rum, commerce in, 41, 42–43
Rush, Benjamin, 43
safety, industrial, and alcohol consumption, 28
Sait, Edward G., 55
saloon: as outgrowth of licensing system, 42; social functions of, 54; as target of prohibitionists, 50–52, 54–56
Sant, Donald, 91
satisfaction, attainment of, vs. desire, 22
Scalia, Antonin, 116
Schumpeter, Joseph, 22
Scopes trial, 50
search and seizure, in enforcement of prohibition, 46
Second Hague Peace Conference, 62
self-destruction, 7
self-esteem, and addictive behavior, 36
self-interest, pursuit at expense of public interest, 127–28
Shecter, Leonard, 135
Shirras, G. Findly, 22
Short, James F., 124
Shultz, George, 10
Silberberg, E., 93n
Silbey, Joel H., 47
Silverman, Lester P., 120
Simpson, Anthony E., 127
Sisk, David E., 137
slaves, and alcohol prohibition, 41
Sloman, Larry, 68
Smith, Adam, 113, 114, 115, 126
Smith, Moe, 81–82
Smith, Ralph L., 135
smuggling: creation of opportunities for, 82–83; in decriminalized drug market, 149; of rum, 41
social groups, distribution of heroin through, 32–33
socialism: vs. anarchism, 17; in economics profession, 11, 12
soldiers: issuance of alcohol rations to, 42, 43n; issuance of narcotics to, 57
Sons of Temperance, 44
South America, narcotics use in, 57
Southeast Asia, political corruption of, 136n
Spain, 136n
Spanish-American War, 62, 69
special interests: compromise by, on narcotics control legislation, 63–64; instigation of prohibition by, 40, 52&n, 53n, 56–57, 59–60, 61–62, 68, 69
“speedball,” 90
standard of living, increased by prohibition, 16. See also development, economic
Stanton, Elizabeth Cady, 48
stifled discovery process, 82, 141, 143
Stigler, George J., 35–36, 37, 81, 133
Stille, Dr.—, 58
stock-market crash (1929), 27
Stone, Lucy, 48
substitution effect: as consequence of increased enforcement, 144, 145; and price inflation, 5–6; and relative prices, 108–9, 109–10; and restriction of supplies, 74; in spread of opium addiction, 57–58, 61n
suffrage, women’s, 48, 49, 50, 53
Sullivan, Edward D., 133
Sumner, Michael T., 95
Sumner, William Graham, 14, 17
supply: extinction of, 75, 76n; as function of product attributes, 92–93; reduction of, by prohibition, 31, 74
Supreme Court, U.S.: death penalty decisions by, 115–16; and narcotics maintenance programs, 64
survey, of employee absenteeism, 25–26, 26 (table), 28
Sylbing, G., 149
syndicates, criminal. See crime, organized
synthetic [designer] drugs, 109
Szasz, Thomas S., 143
Taking Care of Business: The Economics of Crime by Heroin Abusers (B. D. Johnson), 111
tariffs, effects on product attributes, 95, 98
taxation: as alternative to prohibition, 148–49; effect of, on product attributes, 93–96; potency as function of, 95; prohibition as, 93–94, 96, 97, 98–99
Taylor, Arnold, 57
technology: of detection avoidance, 131; effects of changes in, on drug potency, 91, 92 (fig.), 109, 110
temperance, social experiment in, 41. See also intemperance
temperance movement, 43–46; crime as protest against, 121–22; split by prohibitionists from, 51; triumph of coercive tendency within, 45–46, 56, 68–69, 140, 141
THC (tetrahydrocannabinol), 108 (fig.), 109, 110
“A Theory of Rational Addiction” (Becker and Murphy), 10
therapeutic state, 143
Thornton, Mark, 10, 11n, 29
thought, prohibition of, 86–87
Thrasher, Frederick, 126
Timberlake, James H., 53, 54
, 115, 126–27
time-allocation model of criminal behavior, 116
tobacco: increase in potency with taxation, 95; movement to outlaw, 39; “normal use,” 18; potency absent prohibition, 91; regulation of markets, 40, 140, 141; prohibition, 40, 41, 86; repeal of prohibition, 139
Tollison, Robert D., 11, 55
Towne, Charles Hanson, 39
Traffic in Narcotic Drugs (Treasury Special Committee on Narcotics), 64
transportation costs, effect on product attributes, 93, 94 (table), 95
Treasury Department: Narcotics Division, Prohibition Unit, 65; Special Committee on Narcotics, 64
trucks, tariffs on, 95, 98
Tullock, Gordon, 11, 15, 84
Turkey, 58, 136n
The Tyranny of the Status Quo (Friedman and Friedman), 9–10
Tyrrell, Ian R., 44, 47
United Nations, 142
United States Brewers’ Association, 52, 55
United States Pharmacopoeia, 52n
U.S. Steel Corporation, 52
University of Chicago economics school, 10, 35, 38
urbanization, and crime rates, 121, 123
Utah Territory, 48
utility: of addiction, 35–36, 37, 38; of criminal behavior, 116; enhancement of, 78; marginal, of prohibition, 75–76; maximization in free market, 150
utility theory, mathematical model of, 16–17
vagrancy, rates under prohibition, 123
The Value of Law Observance (Bureau of Prohibition), 26–27
Veblen, Thorstein, 15n, 29
Venezuela, 136n
Vermont, 46
Veterans Administration, 97
Vietnam War, 5, 36n.29, 125
violence: of criminal enterprises, 112, 120, 125; elimination of, in free markets, 151
Volstead Act, 5, 19, 20, 100, 133
von Mises, Ludwig. See Mises, Ludwig von
voting: corruption of, 55, 111, 129; reforms of, 48, 49, 50, 53, 54
Wadsworth, James, 49
Wall Street Journal, 9
Walras, Léon, 17
Wanamaker, John, 52
war, intemperance and prohibition as side-effect of, 5, 42, 43n, 55, 57, 62, 64–65, 69, 152
Warburton, Clark, 23; on alcohol consumption patterns, 102, 103, 104 (table), 145n; on costs of alcohol prohibition, 100 (table), 100–101; on economic effects of prohibition, 26 (table), 27–29, 29 (table); on prohibition crime rates, 123; on relative prices of types of alcohol, 101; on role of business in prohibition, 52
Ward, Robert, 95
War of 1812, 43
war on drugs, 125